Dow Jones staff urged to show support for family

Employees at Dow Jones & Co., parent of the Wall Street Journal, are mobilizing to try to stiffen the resolve of the controlling Bancroft family against a $5-billion takeover bid by Rupert Murdoch’s News Corp.

In an e-mail Wednesday, Journal reporter Jesse Drucker exhorted colleagues to join a movement to write letters to each of the three Bancroft family members on the Dow Jones board, urging them to “stand firm.”

The Bancrofts, through legal advisor Michael B. Elefante, who is also a Dow Jones director, notified the board Wednesday that family members holding 52% of the voting power were opposed to the offer. The board announced that it therefore would “take no action” to pursue the deal.

The Ottaway family, holders of 6% of the Dow Jones voting power, also opposes the transaction, the Journal reported Thursday.

The Ottaways acquired their stock in the 1970 sale of a group of regional newspapers to Dow Jones.

Having the “no” vote at 58% makes Murdoch’s job tougher, but observers noted that the media baron has the temperament for a long siege. Besides, his offer represented a 65% premium above where the shares had been trading and instantly sent the stock to its highest level since 2002.

Murdoch, meanwhile, was preparing to reach out to the various branches of the Bancroft family to persuade them to support his bid, according to one person close to the media mogul. Key to that effort is News Corp.’s investment banker, Nancy Peretsman of Allen & Co., who formerly represented the Bancroft family, the official said.

“We’re on pins and needles here,” said a Journal staff member who spoke on condition of anonymity for fear of job repercussions. “There’s a fear the family could fracture on this, and obviously Murdoch only needs to pick up a fairly small amount of support.”

The Drucker e-mail said that the Bancrofts were “under tremendous pressure to accept News Corp.’s offer,” and that the pressure would increase if Murdoch raised his bid.

“The fact they have opposed it so far indicates that they are committed to maintaining the quality of the Wall Street Journal and all of Dow Jones’ publications and products -- despite their opportunity to profit tremendously from accepting the offer,” Drucker wrote.

The three family board members he referred to are Christopher Bancroft, Leslie Hill and Elizabeth Steele, who together with their relatives own 24.7% of outstanding Dow Jones shares. But because the family holds 82.4% of Class B shares that have super-voting rights, their total voting power is 64.2%, the company said in a regulatory filing this year.

The letter-writing campaign came on top of a statement issued by the Journal’s in-house union Tuesday that the staff “from top to bottom” opposed the bid.

Another Journal staffer who also asked not to be identified said that the Bancrofts over the years “really did view the paper as a public trust” and settled for lackluster stock returns, particularly in recent years.

“The family in some ways has been remarkably patient,” he said, “but you have to wonder how long it can last.”

Wall Street still seemed to believe that Murdoch would win out or some other bidder -- perhaps a white knight recruited by Dow Jones -- would emerge to top his bid.

Despite two public rebuffs by the family to Murdoch’s overtures, shares of Dow Jones declined only 23 cents Thursday to $55.77 -- a 54% increase from the closing price Monday, the day before the surprise offer became public.

News Corp. shares gained a penny to $23.44. The company got a thumbs-up from analyst Richard Greenfield of Pali Research in New York, who said the Dow Jones bid “is a sign of just how strong [News Corp.] management believes their core business is performing.”

Even if Murdoch bumped his bid to $65 and sold none of Dow Jones’ properties in an acquisition, Greenfield said the deal would shave only 2% off News Corp.’s estimated 2008 and 2009 profit.

thomas.mulligan@latimes.com